Friday, February 11, 2011

Macroblog speaks for the Fed

But have they [producers] yet [passed on prices to consumers]? Does it seem, as people contemplate market circumstances and their own pricing plans, that widespread price increases are imminent, or even highly probable? The consistent answer we have been getting is no.
Ok, businesses tell the Fed that price volatility in their inputs is a growing concern, but they haven't passed these on to consumers, yet. OK, Fed, ask the secret question they do not reveal. Do these producers intend to reduce product variability when gains drop too low? They will say, None of your business.

The problem is efficient expansion or contraction of the economy requires secrecy, least it be hedged. Producers worry about this all the time, avoiding revelation of product changes before current inventory is sold, a standard business practice. Show me the Fed curve that describes future merges and acquisitions before they are announced by the companies themselves. Show me a curve that describes the future negotiating position of a public union.

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